Source: The Greenlining Institute | Written by: Samuel S. Kang, The Greenlining Institute Legal Counsel

Sam-Kang One month ago, the Greenlining Institute wrote to Insurance Commissioner Steve Poizner asking why the Department of Insurance is treating minority consumers differently from other consumer groups. Greenlining, a consumer protection watchdog, advocates for California’s 22 million low income and minority consumers before numerous regulatory agencies, including the California Department of Insurance. Last month, Greenlining discovered that the Department of Insurance was selectively neglecting the enforcement of its own policies at the expense of minority consumers.

The Department of Insurance regulates the premiums of all property and casualty insurers doing business in California. When an insurance company requests to increase its premiums by more than seven percent, a consumer group can demand a hearing to force the insurance company to justify its rate hike. When a consumer group demands a hearing for a rate hike above seven percent, the Department of Insurance has a clear policy to “initiate joint discussions that include the consumer representative and the applicant regarding the rate application.”

On three separate occasions, Greenlining demanded a hearing against three major, multi-billion dollar insurance companies. All three of these insurance companies were seeking premium hikes of more than 20 percent.

Under departmental policy, Poizner then had the responsibility to “initiate joint discussions” between Greenlining and the insurance companies. But Commissioner Poizner never bothered to initiate any discussion between Greenlining and the insurance company in any of these three instances. All the while, the Department would initiate meetings for other consumer groups that did not specifically advocate for minority consumers.

Greenlining wrote to Poizner asking him why he was treating minority consumer groups differently. He never responded.

Why is Poizner Treating Minority Advocates Differently?

Poizner’s former General Counsel, Gary Cohen, was puzzled as to why Greenlining was apparently being excluded from this policy, which is aimed at putting consumer groups on equal footing with insurance companies. Mr. Cohen confirmed for Greenlining that this policy has been in effect for more than three years. He said that the Department of Insurance even issued an official public Advisory Notice on February 18, 2005 announcing the policy.

Each time Greenlining demanded a hearing, the consumer watchdog group thoroughly detailed for Poizner how the insurance companies were disenfranchising California’s low income and minority communities. For example, Greenlining specifically objected to one insurance company’s arbitrary cancellation of 25,000 homeowner policies in one year. Despite this alarming trend coming at the expense of communities of color, not once did Poizner initiate a joint discussion between Greenlining and the affected insurer as he was required to do.

Why doesn’t Poizner afford Greenlining, a consumer group advocating on behalf of people of color, the same benefit he affords other consumer groups?

Legislative Oversight May be Needed

Under these circumstances, it is difficult to see how the inequitable employment of policies could not be interpreted as an attempt to gentrify the consumer protection system at the Department of Insurance.

Since Poizner is seemingly unwilling to provide Greenlining any explanation for his Department’s selective exclusion, he may require the direct assistance of members of the legislature. For example, the California Assembly Committee on Insurance can offer to provide oversight. The Insurance Committee is led by Chairman Joe Coto, a champion for the underserved. Or perhaps Poizner can explain his department’s discriminatory practices at a hearing convened by the California minority Tri-Caucus led by chairmen Joe Coto, Ted Lieu and Mark Ridley-Thomas.

An audit of the Department of Insurance by California Controller John Chiang may also be helpful to shed light on how departmental policies are fiscally impacting minority consumers. Insurance companies collect at least $118 billion in premiums every year from California’s consumers. An audit may be needed because hamstringing the efforts of minority consumer advocates may be resulting in billions of dollars being siphoned from the pockets of minority consumers.

Skewing the system against minority advocates will inevitably worsen the disadvantages faced by California’s minority communities. Unfortunately, it seems that California’s 22 million minority consumers are unable to depend on Poizner to treat their advocates fairly and equitably. Perhaps the Assembly Insurance Committee, the Tri-Caucuses or Controller Chiang can help reinstate fairness and equity at the Department of Insurance.